Canada and China Strike Tariff Agreement Covering EVs and Canola
Prime Minister Mark Carney has reached a deal with China that will significantly cut tariffs on Chinese-made electric vehicles in return for big reductions in Beijing’s levies on canola seed and the elimination of tariffs on a host of other products.
The truce in a painful trade war helps lessen a major irritant in Canada-China relations as the Prime Minister seeks bigger overseas export markets and new foreign investments to offset the economic damage caused by U.S. President Donald Trump’s protectionist tariffs.
Mr. Carney unveiled the deal after several hours of meetings with Chinese President Xi Jinping on Friday in Beijing.
The deal raises the prospect that Canada may be putting itself offside of Mr. Trump’s tough-on-China agenda, which the President expects allies to follow.
There are caveats to Canada’s tariff concession, which lowers levies on Chinese EVs from 100 per cent to 6.1 per cent: it applies to the first 49,000 vehicles imported each year.
In return, China by March 1 will cut tariffs on canola seed to approximately 15 per cent from current combined tariff levels of 84 per cent.
And, according to Mr. Carney, who announced the deal to journalists Friday, Beijing will also remove tariffs on Canadian canola meal, lobsters, crabs and peas by March 1.
Furthermore, the Prime Minister said, Mr. Xi has committed to removing visa requirements for Canadians travelling to China.
The Prime Minister defended re-engagement with China despite Western criticism of its human rights record.
“We take the world as it is – not as we wish it to be,” Mr. Carney told journalists.
The trade war began after Canada imposed tariffs on Chinese electric vehicles in 2024. Beijing later retaliated with levies on Canadian agricultural products, including canola, pork, peas and seafood.
Mr. Carney’s four-day official visit to China, which began on Wednesday, is the first by a Canadian prime minister since 2017.
On Thursday, the Prime Minister met with Premier Li Qiang and Zhao Leji, China’s top legislator. The two sides signed five non-binding memorandums of understanding, including one on strengthening energy co-operation, at a time of rising petroleum exports to China from Canada. The energy MOU also promotes Canadian uranium sales to China, saying the two countries aim to “strengthen co-operation in natural uranium trade.”
Energy and Natural Resources Minister Tim Hodgson – one of four cabinet ministers accompanying Mr. Carney – said Canada welcomes Chinese investment in energy, including conventional energy such as the oil sands.
“What we heard loud and clear is China is looking for reliable trading partners, trading partners that don’t use energy for coercion,” he told reporters in Beijing, without elaborating on the statement.
The two countries also issued a joint economic and trade co-operation “road map” that said Canada would welcome Chinese investments in areas including energy, agriculture and consumer products as part of a growing relationship.
The Carney government has stressed the need to shift trade away from the United States, which has grown more protectionist under Mr. Trump. Mr. Carney has set a 10-year goal for Canada to double non-U.S. trade, which would generate $300-billion more in annual exports.
Chinese state media, for its part, has warned Canada that a closer relationship means Ottawa should no longer take direction from the United States.
“The Carney government needs to demonstrate that its willingness to strengthen cooperation with China is not just a makeshift move to reduce the bill being charged by the U.S.,” a China Daily editorial said earlier this week.
“If Ottawa still chooses to subject its China policy to the will of Washington again in the future, it will only render its previous efforts to mend ties with Beijing in vain.”
With files from Alexandra Li in Beijing and reports from Reuters and The Canadian Press
This article was first reported by The Globe and Mail
